Sandoval, Reid agree on taxes, but economic visions diverge

Oct. 16, 2010

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Rory Reid's economic plan

Green energy and green jobs: Reid is proposing a 15-point plan, including offering financial programs to attract clean-energy businesses, using stimulus funds to create a Nevada Energy Independence Fund, working with neighboring states to create a multibillion dollar business exporting clean energy, pursuing biomass production to use millions of acres of Pinyon-Juniper growth and allowing homeowners to finance their energy efficiency retrofits through their utility bills.Tourism and economic development: Reid wants to take both of those duties "” which are now done by the lieutenant governor "” and move them into the governor's office. Reid would combine Nevada's 26 state agencies into 16. For example, the Commission on Economic Development would be combined with the Department of Business & Industry into one Department of Economic Development. Nevada's Commission on Tourism would mesh with the Department of Cultural Affairs into a Division of Culture and Tourism. Both would be controlled by the governor, Reid said.Federal dollars: Reid said his administration would get more of federal dollars that Gov. Jim Gibbons has not pursued, estimating it could net the state $186 million.Aggressive tax collections: Reid said Nevada could bring in $9.2 million more annually by stepping up its tax collections.Investing in education: Reid would use universities as an economic driver to create a skilled workforce that will draw new industry. Reid said it would eventually create new revenue of $615 million.

Brian Sandoval's economic planGet out of the way: Job 1 in a Sandoval administration is to maintain Nevada's low-tax climate for business. He said that is the best way to create new jobs and grow the economy.Partner with educators: Sandoval said he has spoken with K-12 and higher education leaders about education strategies to grow business. An eight-year career track through high school and college to better prepare the work force was discussed. He has spoken with leaders of community colleges about designing curriculums to supply new Nevada businesses with a qualified work force.Increase funding for economic development: Sandoval said he wants to see up to $2 million added to Nevada's economic development, even though he also wants state workers to take across-the-board pay cuts.Privatization: State government can become more efficient by privatizing some state services like building and grounds, medical services for prisons, the state motor pool and urban road maintenance.

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Democrat Rory Reid and Republican Brian Sandoval -- Nevada's two top gubernatorial candidates -- both say they have a vision to bring Nevada out of its economic doldrums.

Reid likes to say he has a plan. In fact, he has many. Some are complicated and deal with subjects ranging from green-job creation to higher education. In Rory Reid's administration, the governor would be aggressive in growing business and creating jobs.

"Part of the economic plan is to make Nevada the only energy independent state in the United States of America," said Reid, the chairman of the Clark County Commission.

"We need a leader to stand up and say, this is what we can do and follow me," Reid said.

Sandoval's plan for economic growth is simpler. To the former federal judge from Reno, the best way to create jobs and climb to prosperity is to keep Nevada a business-friendly, low-tax state.

"The No. 1 issue is jobs this upcoming (legislative) session and preserving a positive business environment in this state," Sandoval said. "That is why I have taken such a strong stand against taxes because that is the worst thing we can do, given the economy and given the fact that we are trying to diversify the economy and Nevada's businesses."

"No new taxes" is a mantra shared by both candidates.

Yet at the core of the campaign is a distinction between the two candidates on how Nevada's economy should be jump-started, a University of Nevada, Reno economist said.

"One if the things that shows the difference of the two is that Rory Reid feels the government plays a key role in creating jobs," Thomas Cargill said. "Sandoval comes across as more market-orientated, recognizing that government can provide the basis and the foundation but government can't pick winners and losers. It is the private market that creates jobs. And that is a fundamental issue in this election."

No new taxes

"No new taxes" is a tricky thing when you are trying to fund Nevada's $6.4 billion general fund and have an estimated shortfall of as much as $3 billion, some said.

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State Senate Majority Leader Stephen Horsford, D-North Las Vegas, has suggested that Nevada whittle down its projected $3 billion deficit with about $1.5 billion in government cuts and $1.5 billion in new revenues.

"It should be almost a dollar-for-dollar equation," Horsford told the Las Vegas Sun.

The range between "no new taxes" and $1.5 billion in new taxes will frame the debate between the next governor and the Legislature. That body is expected to be dominated by Democrats, at least in the Assembly.

"I think they both (Reid and Sandoval) want to do that (no new taxes), but it will be very difficult to convince the Legislature," said Tray Abney, director of government relations for the Reno Sparks Chamber of Commerce.

Reid proposes no new taxes but says education spending -- which is more than 50 percent of the state's general fund -- will not be cut. The state should grow its economic revenues over time and save money by making government more efficient. Under Reid, Nevada's 26 state agencies would be cut to 16.

"That's a better way to save money, and it is more fair," Reid said. "All of the impacts have been on the line worker."

Sandoval's plan is all ax and no tax. The budget will be balanced by cuts, not taxes, Sandoval said.

State workers can expect salary cuts. So can educators. A Gov. Sandoval would also take a pay cut, he said.

"In order to get the numbers where we need to get them, there are going to be across-the-board reductions in salaries," Sandoval said about state workers, including teachers, who under law negotiate contracts on the district level and not in the governor's office.

Sandoval's economics are driven by tough love.

"I want to be up front with people," Sandoval said. "There are going to be cuts in education. You can't have it both ways. You can't stand in front of a group of students and say I am going to hold you harmless and then not raise taxes."

The candidates' no-new-taxes stance is something voters and businesses want to hear, many political pundits have said. Yet it is not realistic, said Elliott Parker, the chairman of the economics department at UNR.

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"I don't see how 'no new taxes' is even possible, given the projected deficit," said Parker said. "No governor or Legislature is going to want to shut down the prison system, and I hope they would blink before they shut down the university system.

"We can increase tuition, and we have and probably will be. But the idea that you can come up with that much money without at least extending the ($800 million in) taxes that were currently implemented (in the 2009 Legislature) ... And we are going to lose the federal stimulus money that made it all work. There are so many big holes."

$3 billion, really?

Both candidates question whether the projected deficit is really as large as $3 billion.

A Nevada Policy Research Institute report noted that the $3 billion estimate includes spending increases of 23 percent and the end of furlough and salary freezes for state workers.

"We can argue if it is $3 billion or not," Reid said. "We don't really know what it is."

Sandoval sees hope in recent signs that Nevada's economy is slowly on the rebound. He mentioned the Gaming Control Board's August report, which was released last week, that showed a 21 percent jump in gaming win on the Las Vegas Strip compared to the same month in 2009. Statewide, the jump was 11 percent.

"The good news is that the gaming is coming up, sales tax is coming up; and I am hopeful that we are slowly coming up where there will be relief on that (tax collection) side," Sandoval said.

Despite recent upticks in sales and gaming taxes, neither candidate should count on being saved by a steep rise in the economy.

"Yes, revenues look like that have hit bottom and are starting to recover but nobody expects a really robust recovery for the next few years," Parker said.

Economic development

Both governors tout economic development as a top priority. Both want to be the main man when it comes to bringing new businesses to Nevada.

It could have an impact on the lieutenant governor. Republican Lt. Gov. Brian Krolicki is currently the chairman of the Nevada Commission on Economic Development.

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Sandoval said he will not usurp Krolicki's responsibility but economic development is so important that it should be controlled by the governor.

"There is going to be some overlap, and Brian and I are friends and we get along well," Sandoval said. "But this has come to a point where the governor needs to be personally involved. It sends a strong message to a company that wants to come here and is going to bring several hundred employees. If a governor jumps on a plane and says we want you, then what is holding you back?"

Although Sandoval talks budget cuts, he would like to beef up money spent on economic development by as much as $2 million annually.

Reid was not so diplomatic when he announced his plan last month to take control of both economic development and tourism promotion. Krolicki, who said he did not want to comment on issues of the governor's race, also chairs Nevada's Commission on Tourism.

"The governor is supposed to be the leader of the state, the advocate for the economy," Reid said. "That's the governor's job, and I am going to do the whole job. And if that means the lieutenant governor has a little (more) time on his or her hands, that's fine with me."

Under Reid's plan, the Commission on Economic Development would be combined with the Department of Business & Industry into one Department of Economic Development.

Nevada's Commission on Tourism would mesh with the Department of Cultural Affairs into a Division of Culture and Tourism. Both would be controlled by the governor, Reid said.

Reid said he did not discuss the plan with Krolicki or Democratic challenger Jessica Sferrazza of Reno before releasing it this summer. Independent American Party candidate Ryan Fitzgibbons is also running.

"I want to be the key person in Nevada," Reid said. "I want the buck to stop with me."

Sandoval saw the need for the governor to lead economic development after speaking to Texas Gov. Rick Perry, also a Republican.

"He told me a story about three or four companies that leapfrogged over Nevada and went to Texas," Sandoval said. "I asked him how he did it, and he said that, one, Texas had a low-tax structure; two, it has a very transparent regulatory environment; three, it had an outstanding education system; and finally, he went out personally to close the deal. So I will be the recruiter. I will be the Bobby Knight of governors who goes out to a business and recruits them here."